Insuring a Leased Car: What Kind of Coverage Do You Need?

insuring a leased carWhen budgeting for automotive expenses, it’s important to account for the cost of insurance.

When insuring a leased car, the leasing company may require certain types of insurance or minimum coverage levels. Technically, the leasing company owns the car and uses the insurance requirements to protect its investment in the vehicle. The insurance requirements apply whether you lease a car new or take over the lease on a used car.

So what kind of coverage do you need when insuring a leased car? The specifics may vary, but they will generally include:

  • Liability insurance. This is required for every driver, but when insuring a leased car, the required coverage is higher than the state minimum requirement. This protects you from being held liable in the event of an accident.
  • Collision insurance. This pays for damage to the leased car itself if you get into a collision with another car.
  • Comprehensive insurance. Comprehensive covers all other sources of damage. This includes running into something other than a car, such as a tree or road sign. It also includes theft, vandalism, fire and floods.
  • Gap insurance. Though the above three types of insurance cover everything that might damage the car, they might not cover the full value of the vehicle if it’s totaled. Insurance companies pay for what they calculate as the value of the totaled car, but that doesn’t always equal the leasing company’s book value. Gap insurance is often required to cover that difference.

Besides gap insurance, you may want to consider getting other types of insurance to cover potential holes in your coverage. Options such as personal property insurance are not required by the leasing company, though.

Insuring a leased car does figure into your monthly budget, so you’ll want to get an idea of the insurance costs before signing a lease. This is also a good opportunity to shop around for the lowest rates and see if you qualify for any auto insurance discounts.

If you have any questions about insuring a leased car, feel free to contact us at

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